News and analysis of critical issues in homeland security

August 25, 2010

The Sunday business section of The New York Times featured a long article by Peter S. Goodman looking for lessons in the ruins of the failed crisis management efforts of Toyota, BP and Goldman Sachs (among others). Sadly, the piece overlooked the most important lesson we could take from these debacles: Look before you leap.

Goodman’s informants, like too many others, describe the jobs of crisis management practitioners from the limited perspective of what happens after the crisis become apparent to others. This narrative suggests effective crisis managers do little more than help their clients or bosses face facts, accept responsibility and chart a clear and direct course to safe ground. For this reason alone, they start from the flawed premise that the primary objective of crisis management is to protect — or failing that to restore — the tarnished image of the poor company and its executive whose best laid plans somehow went awry despite their best intentions.

To the extent that this position represents crisis management orthodoxy, it casts the affected company in the position of victim not villain. Sadly, most crises cannot be resolved by sinking to such simple tactics, especially when real victims are left with little recourse but to lick their wounds and hope someone will come along to make them whole again sooner rather than later.

Crisis management is not — or should not be — a separate and distinct discipline occupied predominantly by flaks and fixers. Clearly, many who labor under this label have little more to recommend them than their experience spinning for others or keeping them out of courtrooms rather than actually taking responsibility. Real crisis managers though are closely related to risk managers and emergency managers, both of whom take a comprehensive approach to their fields, which requires them to consider ways of preventing and mitigating harm before things start to become unwound.

Emergency managers think in terms of risk reduction, readiness, response and recovery (or prevention/mitigation, preparedness, response and recovery if you prefer). Crisis managers would do well to think in terms of awareness, ambiguity, adaptation and accountability. Conventional crisis management as practiced by spinmeisters and pettifoggers focuses on the external side of the crisis management diagram.

Crisis managers cannot, however, afford to overlook internal dynamics any more than they can afford to worry so much about what people will think tomorrow that they fail to do something constructive today. As such, crisis managers can play important roles helping organizations design effective monitoring systems that anticipate problems, amplify weak signals, appreciate their salience and ask (or inquire) actively what can go wrong and what should be done to avoid or control it. When problems emerge, effective crisis managers seek to promote and institutionalize organizational learning from the outset rather than rushing to deflect responsibility or avoid accountability.

Goodman and his experts wonder whether the problem is not what people could have done to avoid the problems they created, but whether the consequences of bad decisions are sometimes so riveting or revolting they make it impossible to change the subject. If that’s true in any way whatsoever, then those responsible for the decisions that led to these disasters should have considered such possibilities before things started going wrong.

How, you wonder, could anyone have foreseen such devastating effects from the actions of these companies and their executives? In hindsight, as Goodman and his experts note, it is all too clear that all these situations were both foreseeable and avoidable. But let’s give them the benefit of the doubt, if only as a thought experiment, to see what would happen if we assumed everyone did everything they could to prevent these disasters from happening. Why should this have stopped them from asking what they would do if their assumptions proved incorrect?

This is not such a far-fetched idea. Building codes require designers to consider the effects of earthquakes, which people cannot prevent. But they also require designers to protect a building from fire, which the occupants presumably can control. That’s right, we do not allow people to assume they will always be successful avoiding or controlling fire hazards. We require people to pursue fire prevention measures diligently. At the same time, we still require the same people to take reasonable precautions against the outbreak of fire so people can escape without injury and any fire can be controlled before spreading to the property of others.

We apply very similar logic to many other complex risks. When the stakes are big enough or the consequences terrible enough we ask people to do everything they can to avoid a problem while still taking precautions against its occurrence. Often these added investments prove unnecessary, but we rarely consider them entirely unwise.

Any company, institution or individual unable or unwilling to take a comprehensive approach to managing its crisis exposure leaves no one else to blame. We cannot blame the regulator or the consumer. We cannot assume bad things sometimes happen to good people. We can only make sure we hold good people accountable for becoming better people when they make big mistakes so others won’t have to suffer the same fate in the future.

In 1979 General Public Utilities was a client of the firm with which I served. GPU owned Three Mile Island. In the years after March 28, 1979 we learned a great deal about crisis communications and its relationship with crisis management.

Fundamental to effective crisis communications is accepting responsibility. This involves being practically and demonstrably responsible for every aspect of the crisis, no matter how distant from any prior definition of responsibility (technical, legal, whatever). If the party publically identified as causing the crisis has any interest in surviving the crisis, it must demonstrate acute responsibility for every consequence of the crisis.

Once the crisis has unfolded the party will very seldom, usually never, be given the benefit of the doubt, will be savagely pilloried, and will be compared unfavorably to the spawn of Satan. The only effective response is profound humility, generosity, and active engagement to contain the crisis as soon as possible. No one will ever be appreciated for effective crisis management,but they may be allowed to survive.

Because of our work with TMI, the firm became a specialist in crisis communications. This was not my expertise, but I remember a colleague commenting, “In a crisis my job is to get the client, to be honest with himself and the public, to accept responsibility for prior decisions and present action, and to be holier than holy. Before a crisis the same counsel would get me kicked out of the room. After the crisis I get paid a thousand bucks per hour.” (And this was the 1980s.)

I think you’re asking how we stop honesty, responsiblity and — what’s corporate-speak for holy? — from being thrown out of the room.

2008 wasn’t a crisis, it was a test. The crisis is coming and all the companies who failed the test received billions of dollars from the federal jackpot. It made the great train robbery look like child’s play.

“Andy escapes from the psychiatric unit and Chucky brutally kills the head doctor (Jack Colvin) through electricution in the process. The authorities believe Andy killed the doctor while escaping. Mike and Karen rush back to the apartment hoping that Andy is there. Chucky reaches the apartment where Andy is and knocks him unconscious with a baseball bat to steal his soul. After a prolonged struggle, Karen throws Chucky into the fireplace and Andy lights Chucky on fire after he throws the match in the fireplace.” http://en.wikipedia.org/wiki/Child%27s_Play

A corporation is like a person, with no soul to damn or pants to kick. It’ll steal your soul. Never hit a man with glasses, hit him with baseball bat. It’s looking like a total bust on Wall Street and they’ll make themselves look like victims. Toss another log on the fire. People are going to get hurt or die. People aren’t going to get paid. Time for bacon and nothing for breakfast.

Fort Wayne Journal Gazette – 3 hours ago
BUFFALO, NY – Roast beef and ham distributed to Walmart delis nationwide and sold in sandwiches has been recalled because it might be tainted with the …So no ham and eggs for you guys. They are building a new Walmart here. We’ll be like Buffalo with bad sandwiches. The traffic will be a mess too…The little league will get new bats and girls will get soccer balls. Where’s the beef?

Stop the leaks. We can handle the spin, which is mostly nonsense. So what needs to happen to avoid war? The impossible and mission impossible never ends. When Wikileaks comes to an end, that’s going to be one big operation followed by an extensive post mortem. The winner, My Wife Knows Everything.

Kiss and tell is the kiss of death for a relationship. The romantics are the first to fail in the line of duty. She said no, she really meant maybe. You still have to wait and the waiting is the hardest part. I’m willing to wait until hell freezes over if that’s what it takes. Some beach, ain’t it? Hope the beach ball doesn’t leak…The world keeps spinning!

Well I think this is a great post and thanks Mark for the effort. Perhaps it will cause me to rethink the paradigm that has operated in the past between distinguishing Emergency Public Information–a highly technical subject designed to save lives and property– from Public Information and Affairs. Okay openly admit was once a federal lawyer and the feds no longer have much ability to gather statistical information or even the accurate facts about any incident or event. Why? Well because Congress and the lobbys have seen this inhouse capability destructed. You think this is not pervasive but even the STATE and LOCAL governments have ensured that the ability of the feds to collect even barebones statistical information on federal grants is limited. So all are playing the game of keeping the feds ignorant generally and in a crisis totally. We recently witnessed three major events where there was almost a total breakdown of accurate information, Haiti, BP Catastrophe, and food chain info on safety. Mark’s post demonstrates that EMERGENCY PUBLIC INFORMATION needs to be integrated with other factors by whomever involved in crisis response. If not people will be killed and property destroyed. I would argue even Katrina where the USACOE only after the fact disclosed the weaknesses and lack of a “system” protecting NOLA from various flood threats. Often the departments and agencies through their operations collect key data that should be dessimnated but are not capable or legally authorized to do so. So here is another of the Cumming proposals for reform:
“DISCLOSURE OF INFORMATION DEMONSTRATING ADVERSE IMPACT OF DEPARTMENT OR AGENCY PROGRAMS, FUNCTIONS, OR ACTIVITIES ON PROTECTION OF PUBLIC HEALTH AND SAFETY, LIVES, AND PROPERTY ACT OF 2010

SECTION 1: Any department or agency developing, implementing, or operating and federal domestic program, function or activity must disclose to the public the adverse impacts of those operations as early as possible in the development and implementation phase, any adverse impacts on public health and safety or human lives or property by that proposed or actual operation.
Section 2. The Office of Information and Regulatory Affairs of the Office of Management and Budget will be responsible for development of regulations applicable throughout all Executive Branch entities including the Executive Offices of the President organizations other that the immediate operations of the White House Staff of the President. Such regulations shall be promulgated through federal rulemaking procedures and in compliance with the Federal Register Act of 1934, as amended, and the Administrative Procedures Act of 1947, as amended. Also any contacts with this office by private entities will be disclosed periodically and any written materials furnished to that office will be considered part of the offical rulemaking document and disclosed.
SECTION 3. Once those regulations are promulgated they should also contain the following disclaimer:
These regulations may result in facts not disclosed in advance of an incident or event with adverse implications for public health and safety, or adverse impacts for human lives or property specifically or generally. In the event such a regulatory gap is detected an immediate annoucement shall be made by the head of the Office of Information and Regulatory Affairs that such a gap exists and a procedure may be implemented on an emergency basis allowing such information to be conveyed to the public both as a warning or as a Protective Action Recommendation or Decision. The Office of the Science Advisor to the President shall participate in the identification of such gaps as they appear in the incident/event and so shall the Chairperson of the Council of Envrionmental Quality, the Administrator of the OSHA, EPA, and Secretaries DHS and HHS.
SECTION 4: Violations of this statute may be pursued by private citizen attorney generals against any person or party unless the Department of Justice determines that the public interest in its health and safety requires such action to be controlled by the federal government. Such finding shall be made public with the basis for that finding contestable in civil actions utilizing standard Temporary and Permanent Restraining Orders or actions of a Prohibitory or Mandatory Injunction or actions as to the validity of that decision under the Declaratory Judgement Act. The entirety of this section is designed and should be implemented to protection of health and safety of the public. Impacts on private property rights should be a factor but only health and safety of the public should be the immediate concern of the Attorney General of the United States.
SECTION 5: Any portion of this statute found to be UnConstutional shall be considered severable from all other portions of this Act.”

Hey reform has to start someplace. Let’s begin before the election of 2012. Or even 2010?

LONDON, Aug 25 (Reuters) – European shares fell by midday on Wednesday, adding to hefty losses a day earlier, with Standard & Poor’s cut to Ireland’s credit rating weighing on sentiment and as fears persisted over the outlook for the global economy. http://www.reuters.com/article/idUSLDE67O14K20100825

You have to give the Irish credit, Irish intelligence doesn’t let school get in the way of education. The romantics are all sentimental and that’s why they are the first to fail. You can spin fear. Play spin the bottle with Guiness me guesses… http://www.guinness.com/
or kick the can. Don’t get kicked in the can boys.

Ratings agents 2008. This is solid, you can bank on it. Fast forward 2010. Everybody is poor, issue standard corporate speak excuse and pick up new pair of Gucci loafers and tie. Blame everything on the Irish. The pub is still open! For business! If you are in red ink, have a black beer.

Phil and Bill, both your comments, as usual, have gone to the heart of the matter: the difference between crisis communication and crisis management. The Goodman article made no such distinction. This failure reflects the sort of ends/means confusion that lies at the heart of mistrust of government and corporate crisis management efforts.

We have come to believe information is power. If communication is akin to brokering, then the question has to be “to what end?” or “for whose benefit?” If we possess information, but cannot demonstrate that it influences our decisions and actions in a fashion consistent with community norms and expectations, people will rightly question our motives and intentions.

Likewise, when we inform the public, we must have a clear idea what we expect or want them to do with the information we provide. Anything less confuses transparency and accountability. Being open about something is clearly not the same as accepting responsibility for it.

These days we openly and rightly mock anyone who utters any statement equivalent to “mistakes were made.” Any fool can see something went wrong, but only a truly responsible person can put things right. As we have seen, those responsible for problems often lack the ability to put them right or cannot do that on their own.

Authentic communication should seek to elicit understanding and cooperation. Cooperation in turn should help restore trust by reestablishing norms of reciprocity and consistency.

As my illustration highlights, atonement not accountability is usually what’s expected and indeed what’s needed in a crisis. Atonement involves not only an acceptance of responsibility but also demonstration of an ongoing commitment to learning and behavior change. From where I sit, the jury’s still out on Toyota, BP and Goldman Sachs in this regard.

Bill, the site tools (or at least the ones I have access to) do not allow me to trace with any particular accuracy or precision who’s looking at the site or where they are. We get reports about referring URLs, pingbacks or sites linking back to us, hits per day, search terms used, pages visited and links used.

When you post a comment we get the IP address of your host in addition to any personally identifiable information you provide. We can backtrack from that IP address to get an idea where you might be (or at least where the server was that handled your traffic).

We have tended to draw some rather broad and vague inferences about where people might be (and tangentially who they might be) based on when they visit the site. More than half of the visitors visit the site when it’s AM on the east coast and it trails off steadily from there.

When it gets messy, and it will get messy, you don’t care where help comes from. The jaws of life and other tools come out and work begins. Not too many questions get asked and you aren’t getting paid. The best things in life…